S4 Capital boss Sir Martin Sorrell has warned that ‘client caution on marketing spend’ is likely to mean a tough 2024 for the UK advertising sector.

In this morning’s trading update to the London Stock Exchange, Sorrell – who founded the world’s largest advertising and PR group WPP – warned that clients are expected to remain cautious with regards to spending on new advertising and marketing projects.

Predicting that the global economy is unlikely to show improvement this year, the digital ad business said it expected to see revenues drop by 4% when it reveals its full-year results later this year.

Sorrell, who founded S4 as a tech-focused marketing start-up in 2018, said the company was focusing on “medium-term growth”, as well as “improving profitability and returning funds to shareowners”.

Subscribe to Marketing Beat for free

Sign up here to get the latest marketing news sent straight to your inbox each morning

The digital ad giant told the markets it will be trading in line with lowered expectations as it is “not expecting 2024 to show macro-economic improvement”, with operational earnings at around 10-11% – a level it said improved in the second half of the year thanks to significant cost reductions.

“After four years of very strong growth, 2023 was a difficult year impacted by volatile macro conditions and, consequently, cautious spending from clients, particularly those in the technology sector and from smaller project-based assignments,” said Sorrell.

“Client caution on marketing spend will likely persist, although not at last year’s level given interest rates are likely to fall over time.”

“Our client relationships remain strong and we have also managed costs tightly.”